Canadian compliance 2018: preparing for extended parental leave, Bills 148 and 17, and more

Now is the time for employers to take steps to bring their policies, procedures and operating practices into compliance. From Ceridian’s new Canadian compliance survival guide, here are some tips for employers to prepare.

Team Ceridian

Our experts provide timely, essential insights and analysis for HCM leaders. We share fresh strategies and practical tips for businesses of all sizes, thoughts on hot topics and industry trends, and the latest legislative updates.

Want to stay ahead of the compliance curve and tackle the change process with confidence and clarity? Here is an overview of some top Canadian legislative changes for 2018. For more information on how new legislation will impact your business, your payroll department and HR practices, download Ceridian’s free guide, Canadian compliance survival guide: keeping track of changing legislation.

Extended parental leave benefits

What is it?

The federal government will give individuals the option to extend the period over which they receive their combined maternity and parental employment insurance (EI) benefits – from 12 months to 18 months. Similarly, federally regulated employers will be required to offer eligible employees the option of 18 months of combined maternity and parental leave.

The extended EI benefits and 18 month federal leaves is now available for parents whose child is born on or after Dec. 3, 2017.

It was confirmed by the passing of Ontario’s Bill 148 (November 2017) that the flexibility of an 18-month job protected leave will also be available to employees of Ontario. Mothers and fathers may now choose to take more unpaid time off work while receiving government benefits.

Impact for employers (Ontario and federal)

It will be business owners’ responsibility to understand and respond to these changes. Current policies and processes will need to be reviewed for compatibility with the new option available to parents. There may also be impacts to organizational benefits administration and people management. Longer employee absences may entice you to revisit your existing training and recruitment strategies.

Amendments to employment standards

Bill 148 was passed by the Ontario government on Nov. 22, 2017, and is intended to balance employee rights and economic growth by updating workplace laws across Ontario.

Many of the employment standards changes in Bill 148 came into effect Jan. 1, 2018, including the minimum wage hike to $14 per hour (it will increase to $15 per hour in January 2019). Areas of amendment also include holidays, vacations, overtime, and leaves. Changes to scheduling, on-call and call-in pay rules are deferred until Jan. 1, 2019.

The Alberta government amended the Employment Standards Code in June 2017 through Bill 17.

The amendments came into effect Jan. 1, 2018. Among its highlights are providing unpaid job-protected leaves for illness, domestic violence, and other family emergencies, and overtime and vacation changes. The amendments also prohibit the practice of paying workers with disabilities less than others because of their disability.

Impact for employers

Employers who adhere to the minimum standards in their operations will see an increase to their costs overall. For employers who currently offer more generous benefits and flexible work arrangements, the cost impacts may be less significant.

Regardless of where your business falls along that spectrum, consideration will need to be given to these new requirements and how they might require changes to your existing policies and processes in Ontario and Alberta.

Proposed tax reforms, small business impacts

The following are some ways that government plans can impact small businesses:

A decrease in small business tax rate: Effective Jan. 1, 2018, the tax rate decreased from 10.5% to 10%; this will decrease further to 9% effective Jan. 1, 2019.

Tighter rules regarding income sprinkling: Certain curbs and controls may be applied to income sprinkling, which has, up to now, made it possible for small-business owners to split income among family members to reduce the family’s overall tax bill. The government is looking at simplifying the new rules to ensure businesses with family members who meaningfully contribute to the business will not be affected. It will introduce reasonableness tests for adult family members aged 18 to 24, as well as those 25 and older.

Changes to passive income taxation: Corporate business income is generally taxed at a lower rate than personal income, which can leave corporations more money to invest in their businesses. A private corporation could invest those earnings in passive investments held within the corporation. This allows small businesses to earn a return on their investment while retaining funds for future needs. The government views personal access to tax-assisted savings as an unintended consequence of the available tax planning tools for corporations. It is for this reason that amendments are being considered.

Impact for employers

These reforms will mainly impact the self-employed and business owners with tax plans in place. The profitability of some small and mid-sized businesses may be tested when the government removes some available tax breaks. The complexity of these reforms will require knowledgeable tax and bookkeeping support to stay in compliance.